This book analyses the development of Israeli settlement in Jerusalem. It aims to diagnose the problem and its impacts on Palestinian life and stability as well as prospects for peace in the region. It demonstrates that the issue of settlements remains one of the most contentious factors complicating the Israeli-Palestinian search for peace. Many Israelis view settlements as part and parcel of their historic right to the land of Israel, so Israel made extensive efforts to consolidate its control over the city. Palestinians consider the city as a holy and historical city and the capital of their intended state, while they and the majority of the international community view Israeli settlement as illegal and as an obstacle to peace. Settlements in the Jerusalem area are among the most extensive in the occupied territories, certainly the most controversial and perhaps the most intractable part of the entire settlements issue. It indicates the manner in which it affects the stability and prospects for peace in the region as that Jerusalem is capable of provoking religious and national extremist powers, and creating particular dangers, particularly at a time of tension.